Gov. John Bel Edwards said Thursday he is open to a flat income tax for Louisiana businesses but is wary of the same concept for individuals.
A flat income tax system is one in which all taxpayers pay the same percentage of their income regardless of how much money they make. Louisiana currently has three income tax brackets for individuals and five for corporations.
As The Center Square reports, Edwards said that while he would like to lower income tax rates for Louisiana taxpayers, he would prefer not to move to a single rate for everyone. Proponents of a flat tax generally argue that it’s the simplest and fairest approach.
“I don’t think the poorest person in our state should pay the same thing on the first taxable dollar as the richest person pays on the last taxable dollar,” Edwards said.
Edwards, a Democrat, supports overhauling the state’s tax code by eliminating tax breaks and lowering the rates, a goal he shares with Republican legislative leaders. Eliminating the state’s tax deduction for federal income taxes paid, which would require voter approval to amend the state constitution, likely would be a critical step in that process.
Legislators in both chambers have advanced numerous competing bills in the current session that would make major changes to the state’s tax system. Lawmakers are expected to begin narrowing their options next week.
During his weekly news conference Thursday, Edwards reiterated his position that any new tax structure should bring in about the same amount of revenue as the current one, so as not to create future budget shortfalls. He also said the federal American Rescue Plan, which is expected to send about $5.2 billion to state and local governments in Louisiana, does not allow states to use that money to plug revenue holes created by cutting taxes. Read the full story.